Bexton Australia Pty Ltd v Kuredale Pty Ltd
[2000] WADC 263
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: BEXTON AUSTRALIA PTY LTD -v- KUREDALE PTY LTD [2000] WADC 263
CORAM: YEATS DCJ
HEARD: 11 OCTOBER 2000
DELIVERED : 24 OCTOBER 2000
FILE NO/S: CIV 1539 of 1999
Consolidated with CIV 1977 of 1999
BETWEEN: BEXTON AUSTRALIA PTY LTD (ACN 056 516 075)
Plaintiff
AND
KUREDALE PTY LTD (ACN 064 308 890)
Defendant
Catchwords:
Costs - Plaintiff filed and served six statements of claim - Application for indemnity costs order - Whether failure to comply with case management directions amount to abuse of process - No indemnity costs order made in the circumstances - Application for costs to be paid forthwith - Defendant required to incur costs over and above those it would have incurred had the plaintiff acted diligently - Defendant not expected to bear such costs until proceedings are finalised - Order that costs be paid forthwith
Legislation:
Supreme Court Rules
Federal Court Rules
Result:
Plaintiff to pay the defendants cost of the application in any event with such costs to be taxed and paid to the defendant forthwith
Representation:
Counsel:
Plaintiff: Mr C Edmonds
Defendant: Mr G Rabe
Solicitors:
Plaintiff: Jackson McDonald
Defendant: Ahern & Associates
Case(s) referred to in judgment(s):
Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359
Colgate-Palmolive Pty Ltd v Cussons (1993) 46 FCR 225
Harris v Cigna Insurance Australia Ltd (1995) 17 ATPR 41-445
Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd, unreported; Fed Ct (NSW); 22 May 1998
Thunderdome Race Timing & Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297
Unioil International Pty Ltd & Ors v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190
Case(s) also cited:
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Rouse v Shephard [No 2] (9914) 35 NSWLR 277
YEATS DCJ: On 11 October 2000 the defendant’s appeal from the decision of Deputy Registrar Hewitt delivered on 22 July 2000 came on for hearing before me. On that day I made orders allowing the appeal, dismissing the plaintiff’s application for leave to amend its statement of claim and several programming orders. The defendant sought an order that the plaintiff pay the defendant’s costs of the application on an indemnity basis with such costs to be taxed and paid to the defendant forthwith. I reserved my decision on that issue and now publish my reasons.
History
The plaintiff’s claim has had a long and troubled history in the District Court. The writ issued on 19 April 1999; the plaintiff was late with its statement of claim which was filed out of time on 14 July 1999. Some time thereafter the plaintiff was granted leave to consolidate two actions and on 3 December 1999 filed and served a consolidated statement of claim.
The defendant successfully moved to strike out that consolidated statement of claim. At the hearing on 18 February 2000 the plaintiff sought leave to amend and file the minute of proposed first amended consolidated statement of claim. The plaintiff was granted leave to amend and on 27 March 2000 filed a substituted consolidated statement of claim.
The defendant again moved to strike out that statement of claim. The plaintiff again sought leave to amend and on 15 May 2000 filed a minute of proposed substituted consolidated statement of claim. At the conclusion of the hearing on 22 June 2000 the learned Deputy Registrar granted the plaintiff leave to amend subject to the reorganisation of Annexure A in the manner indicated in the reasons for decision, together with such amendments to the body of the pleading as are necessary to accommodate the reorganised schedule.
Pursuant to leave granted on 22 June 2000, the plaintiff filed a substituted consolidated statement of claim on 30 June 2000.
On the hearing of the appeal before me on 11 October 2000 the plaintiff accepted that certain of the defendant’s objections were correct and, notwithstanding the Deputy Registrar’s grant of leave to amend, suggested that rather than waste the Court’s time hearing the appeal that the appeal be adjourned and that the Court grant leave for the plaintiff to file and serve a further substituted consolidated statement of claim dated 12 October 2000, a minute of which was produced to the Court.
From this history it can be seen that the statement of claim dated 12 October 2000 is the seventh version put forward by the plaintiff. It is a lengthy document with annexures totalling 66 pages in all. The defendant submits that the plaintiff has failed to comply with case management principles; instead of considering the defendant’s objections the plaintiff has insisted that the defendant proceed by chamber summons to strike out the pleadings. That inevitably involved considerable delay. The chamber summons had first to be listed and then the matter set down for a special appointment in the District Court. On both occasions once the strike out application was to be heard the plaintiff has resiled from its pleading and sought leave to amend based on a further amended statement of claim. Court records confirm that this has happened in strike out applications before the Deputy Registrar on 18 February 2000 and on 22 June 2000. It happened again on 11 October 2000 when the defendant’s appeal came on for hearing before me.
Indemnity costs
The defendant submits that each statement of claim has been prolix and confusing and has been drafted in a way totally contrary to the requirements of the rules related to pleadings. The defendant suggests that any competent legal adviser understanding the facts of the matter and having a knowledge of the law should have been able to “get it right” long ago.
The defendant submits that indemnity costs should be awarded in this case because the plaintiff’s conduct unacceptably departs from the standards of litigation in a commercial court in a way which prevents the court from conducting the litigation in an expeditious way.
The plaintiff submits that an indemnity costs order is not appropriate in a case such as this where the plaintiff has struggled over some time to properly formulate its claim. The plaintiff submits that its seven attempts indicate good faith and diligence on its part. The difficulty the plaintiff faces is that the plaintiff and defendant entered into a lump sum contract by which the plaintiff agreed to do certain work. Subsequent to that there were requests for additional work. The plaintiff contends that it is not an easy legal issue to determine whether those requests form part of the original contract, or operate to cause a variation of the original contract, or, whether the requests and undertaking of the additional work formed an entirely new and independent contract or, to determine whether it is not a case in which you have no contractual claim at all and you must sue in quasi-contract or in restitution.
The plaintiff further contends that the defendant has been in default in failing to file a defence because its appeal did not operate as a stay (O 6, r 11(4) District Court Rules). The plaintiff relies on the order of the Deputy Registrar that the defendant have 14 days from service of the consolidated statement of claim on 30 June 2000 in which to file and serve its defence and contends that the defendant has not done so. The plaintiff submits that the defendant’s defence would assist it in finalising the legal issues in the case.
The plaintiff contends that before indemnity costs could be ordered there must be exceptional circumstances and conduct by a party that is deliberately undertaken in a way that subverts the course of justice. That has not happened in this case.
Ruling on indemnity costs
An order for indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice (Colgate-Palmolive Pty Ltd v Cussons (1993) 46 FCR 225 at 233). The Court has a wide discretion (Unioil International Pty Ltd & Ors v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, unreported; SCt of WA; in chambers per Ipp J; Library No 970491). In Colgate‑Palmolive Shepherd J reviewed the relevant common law principles and noted some of the circumstances which have been thought to warrant the exercise of discretion. These include the making of allegations of fraud known to be false, the making of irrelevant allegations of fraud, evidence of particular misconduct that causes loss of time to the Court and the fact that proceedings were commenced or continued for some ulterior motive.
In Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362, Powell J said this:
"The circumstances in which one is justified in departing from that established principle are, as it seems to me, limited, and it seems to me that, as a general rule, an order that costs be taxed on an indemnity basis is justified only where the action taken, or the action threatened, by the defendant constituted, or would have constituted, an abuse of the process of the court, or where the actions of the defendant, in the conduct of any defence to the proceedings, have involved an abuse of the process of the court, in the sense that the court's time, and the litigant's money, has been wasted on totally frivolous and thoroughly unjustified defences."
The idea that the failure to comply with case management directions and the waste of the Court's time can ground an order for indemnity costs is confirmed in Seaman on Civil Procedure at par 66.1.16(A).
“Because the civil business of the court will not operate satisfactorily if case management directions are not complied with, the court may mark its strong disapproval of conduct of a party which is designed to subvert the spirit of O 1 rr 4A and 4B by an order for payment by the party involved of costs on an indemnity basis forthwith: (Inform Formwork Pty Ltd v McInnes Concrete Service Pty Ltd (Full Court; 1995; unreported; Library No 950611). Indemnity costs may be awarded against a party whose conduct unacceptably departs from the standards of litigation in a commercial court in a way which prevents the court from conducting the litigation in an expeditious way (FAI General Insurance Co Ltd v Byrnes (1996) 9 ANZ Ins Cas 61‑384 at 77,221).
Indemnity costs are often awarded when a party has conducted its case in wilful disregard of the facts or the law. See for example Carroll v Azolia Pty Ltd, SCt of WA; in Chambers; Wheeler J; Library No 980004).”
It cannot be said that that sort of wilful disregard has occurred in this case. However in this case the defendant does not complain of the fact that the plaintiff has now made seven tries at its statement of claim; the complaint of the defendant is that the plaintiff has failed to amend its pleadings until the defendant has taken action in court to strike out or appeal. It is submitted this has wasted a considerable amount of time and is therefore contrary to sound case management principles.
It is readily apparent from the Court file that this is the third occasion when the plaintiff has resiled from its pleading on the eve of court proceedings and put forth yet another version of its statement of claim in opposition to the defendant’s applications to strike out or, on this occasion the defendant’s appeal. It is that repeated behaviour on the part of the plaintiff that I consider to be contrary to the principles of case management adopted in the District Court, behaviour which has led to repeated and substantial waste of the Court’s time that is capable of providing the special circumstances justifying an order for indemnity costs.
True it is that on the two earlier occasions the defendant had the benefit of an order for costs thrown away. But that does not adequately meet the needs of this Court in the management of its civil list based on sound case management principles. The District Court’s milestone for close of pleadings is normally 60 days from the defendant’s appearance. The plaintiff’s repeated last minute production of amended pleadings on the day of hearing has allowed considerable time to pass and be wasted and put this action 16 months outside normal court milestones.
On the other hand I accept the plaintiff's submission that it has faced considerable difficulty in finalising its pleading. The merits of the appeal have not been argued before me and it is inappropriate that I form a concluded view. In these circumstances I accept the plaintiff's submission that it has acted in good faith. There has, however, been what amounts to an abuse of process in that the Court's time has been wasted setting down strike out applications and an appeal for hearing when those hearings were rendered unnecessary by the tender of further revised pleadings. Repeated waste of the Court's time is an abuse of process and could lead to an order for indemnity costs in an appropriate case. In this case I consider the behaviour is not so thoroughly unjustified as to lead me to make that order.
For these reasons I decline to order the payment of costs on an indemnity basis.
Payment of costs forthwith
Order 66 r 10(1) provides:
“Costs may be dealt with by the Court at any stage of the proceedings or after the conclusion of the proceedings, and any order of the Court for the payment of costs may require the costs to be paid forthwith notwithstanding that the proceedings are not concluded.”
Although O 66 r 10(1) provides an express power to order that costs be paid forthwith cases indicate that special circumstances must be shown before the Court will make such an order. In Thunderdome Race Timing & Scoring Pty Ltd v Dorian Industries Pty Ltd (1992) 36 FCR 297 at 312 Olney J said:
“The discretion should be exercised in favour of a party who establishes that the demands of justice require that there be a departure from what appears to be the general practice envisaged by the rule, namely, that an order for costs of an interlocutory proceeding shall not entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded.”
In Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd, unreported; Fed Ct (NSW); 22 May 1998; Branson J in the Federal Court found that the circumstances warranted making an order that the costs of an interlocutory application be paid forthwith. Branson J referred to the decision of Kiefel J in Harris v Cigna Insurance Australia Ltd (1995) 17 ATPR 41-445 where payment of costs forthwith was ordered in a case where there had been “long delay in the close of pleadings by the pursuit of an ill-considered and perhaps unnecessary claim”. Branson J then said:
“Her Honour’s approach appears to reflect a view, with which I am in agreement, that the demands of justice may well require a departure from the ordinary rule that costs are to be paid after the completion of proceedings, where a party has been required to incur significant costs over and above those which it would have incurred had the opposing party acted in the handling of the proceeding with competence and diligence. In this case the applicants filed and served five different versions of the statement of claim over a period of nine months. The applicants’ own counsel ultimately conceded that the first four versions were unsatisfactory and required to be redrawn, but not before the respondents incurred the costs of instructing counsel to attend at court and strike out applications. Costs incurred in such circumstances are not costs which, in the ordinary course, a party should be expected to bear until a proceeding is concluded. They are costs in reality thrown away and in respect of which, in my view, the demands of justice may require a departure from the general practice envisaged by O 62 r 3.”
Order 62 r 3 of the Federal Court Rules is in similar terms to O 66 r 10(1) of the Supreme Court Rules. The factual circumstances in Life Airbag are not dissimilar to this case except that in this case seven different versions of the statement of claim have been placed before the Court. In this case I do not believe that the defendant should be expected to bear these costs until the proceedings are finalised. I am satisfied that there are special circumstances which justify the making of an order that the costs be paid forthwith and not await the final conclusion of proceedings.
Conclusion
For these reasons I order that the plaintiff do pay the defendant’s costs of the application in any event with such costs to be taxed and paid to the defendant forthwith.
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